National Audit Office Raises Serious Concerns Over Child Maintenance Scheme’s Accounts

Sign of the Department for Work & Pensions office in London taken on Dec. 18, 2014. (John Stillwell/PA Wire)

The auditor general of the National Audit Office (NAO) has raised serious concerns about the financial statements of a key account run by the Child Maintenance Service (CMS), in a report released originally on Dec. 6.

Sitting within the Department for Work & Pensions (DWP), the CMS is an agency responsible for overseeing the collection and management of financial support for children when parents live separately. It has gained notoriety in recent years, due to concerns over its effectiveness in assessing paying parents and assisting children’s primary carers in receiving funds.

The Client Funds 1993 and 2003 Child Maintenance Schemes Account (CMSA) is a financial mechanism managed by the CMS. It deals with funds related to child maintenance payments. When non-resident parents owe child maintenance, those payments go through the CMSA. The account tracks these financial transactions and ensures that the collected funds are appropriately distributed to the parent with care or the Secretary of State.

The CMS inherited a legacy of over £3.7 billion in uncollected arrears from its forerunner, the Child Support Agency (CSA), based off the 1993 and 2003 CMSA, in 2012. Doubts have grown over the legitimacy of the inherited debt, after a former minister and a senior MP both called for a full public enquiry into the CSA and CMS’s historical practice of inflating debts.

Auditor General Raises Concerns

In the latest 2023 Client Funds Account report, the NAO’s Comptroller and Auditor General, Gareth Davies, certified that the CMS’s financial statements for the year ended March 31, 2023, failed to properly present the Statement of Balances and its receipts and payments. He highlighted significant technical issues, stating that these financial statements do not adhere to the Government Resources and Accounts Act 2000 and HM Treasury directions.

The NAO has refused to regularise the CMS’s financial statements regarding the 1993 and 2003 CMSA in any of their year-end reports since the agency’s inception in 2012.

While acknowledging that income and expenditure align with Parliament’s intentions, Mr. Davies qualified his opinion due to irregularities resulting from transactions not conforming to legislation. Notably, a substantial portion of receipts from non-resident parents, amounting to £29.7 million, were for incorrect amounts, raising further questions about the accuracy of child maintenance payments.

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The report identifies an outstanding maintenance balance of £196 million as of March 31, 2023. Individual arrears balances were found to be misstated due to errors in historic underlying assessment calculations. Mr. Davies emphasised the material level of misstatement, characterising the error as pervasive to the accounts, with outstanding maintenance arrears driving this uncertainty.

Noel Willcox, a political candidate for Reform UK and a longtime campaigner for the rights of mistreated paying parents, sharply criticised the CMS, asserting that despite claims of addressing child poverty, the service provides little in terms of tangible support for families.

Speaking to The Epoch Times by email, Mr. Willcox raised significant reservations about the CMS’s operating procedures, saying: “The way CMS conducts themselves is having a negative impact on children and the family unit. It’s apparent from their operating procedures that parents do not discuss the CMS’s calculations, so they cannot scrutinise the calculations. Therefore if conflict between parents is maintained by an intervening third party’s procedures—it’s very easy for money to go unaccounted for and children left without either a family unit or sufficient funds.”

Calls For Investigation Over ‘Systemic Misconduct’

In a separate revelation from the same 2023 Client Funds Account report, a cryptic line suggests that investigations into potential fraud within the Child Maintenance Service might lead authorities into uncharted legal territory.

Despite stringent controls to prevent and detect fraud, the report states, “It isn’t possible to ascribe a robust estimate specific to child maintenance fraud as such investigations might uncover activities which go beyond fraud in the context of child maintenance.”

Many familiar with the issue are now questioning what activities might transcend the scope of fraud, potentially creating a complex legal maze for authorities. The report also acknowledges persistent historic levels of error, impacting the opinion of the Comptroller and Auditor General.

Expressing alarm over the NAO’s suggestion that CMS activities might extend “beyond fraud,” Mr. Willcox demanded an urgent police or National Crime Agency (NCA) investigation into what he deems decades-long systemic misconduct. Drawing parallels to commercial practices, he argued for reporting the CMS under Money Laundering and Terrorism Financing Regulations.

Former minister Ann Widdecombe called for a full public enquiry into the CMS back in September, doubling down on similar calls from Labour’s chief whip Sir Alan Campbell.

Mr. Willcox went further in calling for the suspension of the CMS, saying: “This has been systemic misconduct for decades and the mention of practices going ‘beyond fraud’ now warrants an immediate police or NCA investigation. It’s very clear from the scope of the reports that the CMS seem to offer very little in terms of the DWP’s claim that the money will go to children and lift children out of poverty.”

Urging immediate action, he emphasised, “The government and civil service must be held to account; this is yet again another example of the two-party political system, where corruption is accepted as business as usual and not dealt with.”

Tice Questions Civil Service Powers

Richard Tice, leader of Reform UK, has voiced his concerns following the NAO’s revelation of persistent financial irregularities within the CMS.

Speaking to The Epoch Times, Mr. Tice emphasised the potential detrimental impact on children and families, stating, “If the CMS can’t manage the systems to process information effectively and transparently, what hope is there for the actual welfare of the child?”

He underscored the adverse effects of inaccurate figures being pursued from paying parents, leading to financial hardship and familial strain. Mr. Tice also criticised what he sees as a prolonged lack of accountability for the 1993 and 2003 schemes, pointing out the absence of oversight despite calls for a public inquiry into the CMS.

“The NAO has not signed off accounts for the 1993 and 2003 schemes for decades, across both Labour and Conservative governments. The lack of accountability to date, let alone legal implications, despite calls for a public inquiry into the CMS, shows how unaccountable our bloated bureaucratic government is.”

Expressing worry about the unaccountable nature of government departments, Mr. Tice highlighted the CMS gaining more power without sufficient legal scrutiny. He emphasised the erosion of the separation of power and justice, stating, “This makes a mockery of separation of power and justice.”

Reform UK, a centre-right independent party set up from the remnants of the Brexit Party headed by Nigel Farage, advocates for judicial scrutiny of CMS calculations to prevent abuses of power. Mr. Tice affirmed the party, which is now polling regularly at over 10 percent ahead of the general election next year, has a stated mission to root out criminality and corruption in government, asserting, “Reform UK will continue to highlight the failings of government and civil service.”

Issues Over ‘Fictitious Arrears’

In November, The Epoch Times reported that the CMS could be demanding money from paying parents without due process, based on evidence seen at the time.

The evidence centred on the CMS’s handling of income assessments and Current Income Checks (CICs), which evaluate the paying parent’s income for the previous month to determine the appropriate level of child support payment they must make.

Correspondence seen by The Epoch Times suggested that the CMS has routinely disregarded proper procedure.

At the time, Mr. Willcox claimed that despite paying what was requested, parents often found themselves burdened with thousands in, as he termed it, “fictitious” arrears.

Speaking to The Epoch Times, he said, “Paying parents are saying that there are many suicides linked to the Child Maintenance Service judgments … The financial hardship is causing anguish amongst paying parents and these calculations have resulted in paying parents taking their own lives.”

According to peer-reviewed data compiled by Brian Hudson, a businessman and campaigner for the rights of paying parents, figures on the mortality of paying parents from sources including the CMS itself, the DWP, and the Office for National Statistics reveal a concerning pattern among those in arrears with the CMS.

The data, obtained via multiple Freedom of Information Requests, indicates that parents in arrears have a mortality rate a staggering 14.28 times higher than the national average, constituting a profoundly elevated risk of death among paying parents.

The DWP and the Secretary of State for Work and Pensions have been contacted for comment.